Quackenbush Scandal Played Starring Role in 1999-2000 Legislative Session

By | September 15, 2000

As the clock struck midnight on Aug. 30, lawmakers were spent but still deciding the fates of a handful of bills that would affect the insurance industry. So how did the 1999-2000 legislative session compare to other years?

“There is no comparison,” said John Norwood, legislative counsel for the Independent Insurance Agents and Brokers Legislative Counsel (ABL). “We started this year out and…right in the middle, we had this Insurance Commissioner scandal, and that seemed to take the wind out of almost every bill of significance.”

Sam Sorich, vice president and western regional manager for the National Association of Independent Insurers (NAII), agreed. “When you look at what [bills] passed, I think had it not been for the Quackenbush controversy, this would have been a much quieter session for insurers,” he said.

The number one political objective of Senator Jackie Speier (D-Hillsborough), chair of the Senate Insurance Committee, was the Quackenbush deal, according to Norwood. “So bills and committee hearings became secondary, and I think that was true in the Assembly as well,” Norwood said. “Bills happened, but people didn’t have an appetite for a lot of very controversial things.”

In fact, the Senate Committee recommended broad reforms in the wake of the Quackenbush scandal. The reforms were contained in the Senate Insurance Committee’s report on its five-month investigation of the former Insurance Commissioner, who resigned July 10 rather than face impeachment.

The bottom line is that whenever a “scandal” arises, legislative action has to be taken to address the issues at hand. “Had it not been for the Quackenbush controversy, we probably wouldn’t have seen a number of bills advance-and that’s just the legislative reality,” Sorich said.

AB 481, SB 1524 and SB 2107

Diane Colborn, senior legislative advocate and counsel for the Personal Insurance Federation of California (PIFC), referred to three bills-AB 481, SB 1524 and SB 2107-as the “trilogy” stemming from the downfall of California’s Insurance Commissioner.

•AB 481 would require that all settlements must provide for restitution to claimants when the Insurance Commissioner determines that an insurer has failed to comply with fair claims settlement practices.
•SB 1524 would prohibit the use of settlement money for public service television spots that feature the Commissioner. On Aug. 29, the Assembly approved the measure, which now goes back to the Senate.
• SB 2107 establishes certain restrictions and limitations on the Commissioner pertaining to the settlement of administrative actions. “It’s pretty clear where these three bills came from,” Sorich said. “They are a direct reaction to the Quackenbush scandal.”

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